CHT gains access to North America with ICM Silicones Group purchase

CASSOPOLIS, Mich.—ICM Silicones Group and CHT Group are about to take the next step in silicone compounding.

The firms will combine to make a significant Tier 2 player in the silicones space now that CHT finalized a deal to acquire ICM and its group companies, including QSi and ACC, from its private equity owner Century Park Capital Partners.

The deal was finalized Aug. 24. Financial details were not disclosed, however ICM CEO Levi Cottington said the ICM Group combined for about $70 million in global sales with more than 160 employees worldwide.

"This is probably one of the best fits that I've ever seen," he said. "If you look at CHT's map, they had very little presence in the U.S. and now they have access in a big way to the U.S. market. They can funnel into the U.S. in a very effective way and on top of that they get a different technology base from ICM Silicones Group. There is very little overlap, so the fit is perfect."

ICM has been preparing for a move like this for the last few years under the ownership of Century Park Capital. Cottington said the private equity firm's goal was to lay the foundation for growth through strategic investments. And ultimately it's paid off.

On the global footprint side, ICM acquired Amber Chemical Co. Ltd., which drastically strengthened ICM's global presence. Amber consisted of QSi L.L.C. in Richmond, Va.; Treco S.r.l. in Milan; ACC Silicones Ltd. in Bridgwater, England; ACC Silicones Co. Ltd. in Tianjin, China; and Siovation L.L.C., which previously was based in Lawrenceville, Ga., and relocated to ICM's headquarters in Cassopolis.

"The global footprint for a custom compounder is unique in the industry," said Ken Kemerer, ICM chief operating officer. "Taking four or five independent chemical/silicone sites and merging them into one organization is what we've done over the last three years, and getting it ready for an opportunity like this to use those synergies to grow even faster with CHT."

On top of that, ICM has invested more than $600,000 to expand its laboratory capabilities for research and development. Phil McDermott, ICM vice president of technology, said its headquarters in Michigan received about $400,000 to extend its lab to 2,300 square feet and the ACC site in Bridgwater received a $200,000 project, also geared toward expanding its R&D capabilities.

Cottington added that the firm's Treco unit in Milan also received additional personnel.

"It was a very positive relationship," Kemerer said of Century Park Capital. "They invested in growing the company and positioning the company for growth. Be it capital for the labs or equipment, we've spent the last three years going from smaller independent local companies into a global organization."

ICM is fully focused on the silicones market with two major segments. Its QSi and ACC business primarily deal with RTV1 and RTV2 silicone compounds along with other pastes and gels for electronics, potting, capsulizing and other tins like thermal interface materials. Its other units focus on silicone liquids that go into personal care, automotive, food processing and antifoams, among other industries.

One of the strengths of the CHT deal is that its new parent company does not operate in many of the same industries. CHT primarily is focused on the textiles market, utilizing both silicone and non-silicone products.

Kemerer said ICM will benefit from CHT's presence in textiles, a market the firm was not active in, along with being able to draw from CHT's portfolio of raw materials for greater access and control over its internal processing. And on the other side CHT stands ready to benefit from ICM's strong elastomers/RTV1 and RTV2 silicone compounds business.

"I'm really excited about this," McDermott said of the CHT deal. "I think it's going to expand our technology toolbox. It will allow us to backward integrate with access to custom polymers, and their R&D team is very, very strong. It's going to be a very good marriage from a technology perspective and the skill set that comes with the combined teams is very strong."

Based in Tubingen, Germany, CHT operates 20 sites worldwide—in Europe, Asia-Pacific and South America. But it did not have a presence in North America. The ICM deal will give it an instant infrastructure in one of the world's biggest markets. Cottington estimated ICM's North American sales north of $45 million with about 100 employees in the region.

The deal also gives the silicones industry another Tier 2 supplier, which Cottington said was something the global market had lacked.

"There are not a lot of Tier 2 silicone suppliers," he said. "If you compare that to the organics or chemicals side, you have the big guys, but you also have all kinds of Tier 2, 3, 4 chemical companies. The silicones industry isn't really structured that way. The companies that are out there are either regional or very market specific. What CPC did—not necessarily by design—but they put in place one of the few Tier 2 silicone companies out there."

Now that the deal is done, both firms are focused on capitalizing on its potential.

"We just have to wade through and figure out what makes the most sense to do first," Cottington said. "We want to roll out our integration plan and figure out where the biggest focus should be. Everybody has their own ideas, but it really comes down to what we can do short term, mid-term and long term."